Applicable Area of VAT From the very inception, BAT was applicable on most of the goods and a few

w numbers of services at the rate of 15%. It was imposed by placing the Sales Tax (chargeable at different rates at import stage) and the excise duty (chargeable at different rates on locally produced goods and rendered services) and the Business Turnover Tax ( chargeable at a rate of 2% on some local small units) Under VAT Act Supplementary Duty (SD) at a small rate is applicable on some goods and services (SECTION 7) Under VAT Act and Rules a Turnover Tax (TT) at a rate of 2% was introduced on actual turnover goods and services not exceeding tk. 500000. Later on, the rate was upgraded to 4%. Now at 3%, if the yearly turnover is not over 70 lac. (Rule 4) At the early stage some high revenue yielding goods like cigarette, biri, natural gas, petroleum produces etc were kept under the Excise Duty System to avoid the revenue risks Tax base was broadened time to time by bringing some new goods and new services under the VAT Network. The list of exemptions is being shortened every year. (SECTION 14)

VAT Levi-able on (area of Applicability): All exports, deemed exports, all goods under the H.S Nomenclature exception the following: (Section 3, 8) o All exports, deemed exports and foods for consumption outside Bangladesh and other Goods supplied to an outgoing conveyance o All goods under Second Schedule of Narcotic Control Act, 1990, incase of manufacturing in Bangladesh o Goods described under the First Schedule of the VAT Act, such as: Live Animals, meat, fish, fresh milk, unprocessed agricultural products, natural sands, rough timber, raw milk, cocoon, raw wool, raw cotton, raw jute etc o Goods and services under the turnover Tax VAT is applicable on all services excepting the services described under the Second Schedule of the VAT Act, such as: o Basic services to live on, personal services, social welfare services, medical and health services given by the private sector, library, museum, art gallery, zoo, botanical garden, transmission of Radio, TV (excepting other commercial activities), taking deposit and savings by Bank and Financial Organizations, life insurance policy savings, SEC, Transportation of passenger (without AC) and goods, Air Lines (excepting the farm rents chartered plane and helicopter),

religious activities, postal services (excepting courier and express mail services), all charitable and scientific service activities provided for public interest, stevedoring and hand operated laundry and cleaning activities (except services provided in hotel and mechanized laundry etc) Services under First Schedule (Part 2) of the Excises and Salt Act, Such as: Services rendered by Bank or financial institute and services rendered by airline.

TAX EXCEMTIONS FOR COTTAGE INDUSTRIES Goods produced by the cottage industries are exempted from VAT and SD under some conditions mentioned below as per the SRO no. 169-Law/2003/376-VAT, dated 12 June, 2003 issued under section 14 (1) of VAT Act. Conditions: For the purpose of the SRO, Cottage industries means: It should not be a joint stock company Its invested capital for plant, machinery and equipment at any time in the year should not be over 25 lack Taka Its annual turnover should not be more than BDT 40 lacs Procedure:
Fulfilling the above SRO conditions the manufacturer of VAT payable goods exce[pting the goods under the negative list will app;y to the commissioner of VAT in form mushak-6 with a declaration in formka. After enquiring into the matter, if the commissioner is confirmed that the applicant has fulfilled the conditions as per the SRO then he will direct the divisional officer of VAT to enlist as a cottage industry. Then the divisional officer of VAT will enlist it as a cottage industry tin form mushak-8. The enlisted person will maintain accounts of transaction in form-kha and tat the time of supplying the goods, he wil always issue a cash memo mentioning the enlistment amount. Negative List for Cottage Benefits: Palm Oil (All Sorts), coconut oil (All Sorts) CDSO, Soya Bean oil Tea, lozenge, biscuit, chanachur Juice, energy drink, mineral water All types of cigarette, biri, zarda, gul Antiseptic, disinfectant, medicine Paints, pigments, Varnishes, polishes Perfume, water used in cosmetics, cosmetics Sun screen or sun tan materials, hair items Toothpaste and like items

Shave and after shave items Deodorant, air freshener Soap (all sorts with liquid) PVC pipe, bricks (all sorts) M.S. products, metal container Super enameled copper wire Household fan (fitted with electric motor of production capacity not over 125 watt) Dry cell battery, storage battery VCR, VCP, Radio and transistor excepting one band Television (all sorts) Electric bulb, wires and cables Transport (all sorts) and its body and chassis Cruise ships (all sorts), excursion boats, ferry boats Cargo ships, Berge and similar ships for carrying passenger and goods; fishing boats Factory ships and other ships, used for preparing and preserving goods like fish Yachts and other boats, rowing boats and canoes for games for entertainments Tugs and pusher craft, rubber and plastic foam